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Crucial gold production costs for East Otago-based Oceana Gold have almost doubled in the past year as plant maintenance costs and the high New Zealand dollar take their respective tolls.
For the quarter ended March, Oceana posted revenue of $US88.6 million ($NZ108.5 million), earnings before interest and tax of $US23.2 million and and an after-tax loss of $US3.86 million, the latter comparing to a $US14.7 million profit for the corresponding quarter a year ago.
A year ago, it cost Oceana $US687 to produce an ounce of gold.
That rose to $US947 in the quarter to December and to $US1126 for the quarter to March, the latter adjusted to combine the administration costs of three different offices.
Gold production was down 23%, from 65,750 ounces in the quarter to December to 50,842 ounces.
Oceana cited several reasons for the production decline, including lower grade ore, planned plant maintenance, underground access restrictions and adverse foreign exchange movements.
Oceana retained its guidance forecast for the calendar year of producing between 230,000 ounces and 250,0000 ounces at a cost of $US900 to $US980 per ounce, with the second-half production boosted by better ore grades and a return to normal underground operations.
"As a result of the higher production expected in the second half, cash costs are expected to be lower in this period assuming constant exchange rates," Oceana said in a statement.
Brokers from Forsyth Barr and Craigs Investment Partners are expecting improvements in second-half trading, having been disappointed with the first-quarter result.
Craigs' broker Peter McIntyre said while the quarter's result would have been disappointing for Oceana, it remained "in a relatively strong cash position" at $123 million and construction work on its Philippines gold and copper development project was about halfway complete.
"If gold holds around $US1600 the [future] copper offsets will be a huge contribution to keeping production costs down," Mr McIntyre said.
Forsyth Barr broker Peter Young said Oceana's first-quarter production was a "lowly" 50,842 ounces of gold, noting it was a 23% decline compared to the previous quarter and full-year profit expectations were downgraded 48% to $US25.5 million.
"This low production figure meant cash costs per ounce blew out to $US1126.
Costs in absolute terms were slightly up, but that is more currency-related than anything else," he said.
It was important Oceana had maintained its full-year production guidance of 230,000 to 250,000 ounces, but Mr Young estimated production volumes would be at the lower end, being 13,000 ounces down to 238,000, which would affect after-tax profit.